TV Content wars, blackouts could spur M+A

Evercore analyst Bryan Kraft believes the prolonged blackout that has left DirecTV’s 20 million subscribers without MTV, Comedy Central or Nickelodeon for a week, could lead to some industry consolidation.

If DirecTV and Dish comes out the winners, he said, it encourages cable TV networks to merge, but only when their valuations fall. DirecTV has pushed backed against what it claims are exorbitant increases in Viacom’s programming fees that it says it does not want to pass on to customers.

And DirecTV viewers aren’t the only ones suffering. Kraft estimates that the dispute is making Viacom lose about $14 million a week. Meanwhile DirecTV would need to lose 1.15 million subscribers before its cash flow was impacted. Kraft said that if DirecTV expects to lose more than 1.15 million subscribers, it should pay up the $3 per subscriber fee Viacom is likely seeking.

As one of the most high profile blackouts stretches into its second week, time will tell whether the spat will be the one that changes the pay TV landscape for good or whether it just causes viewers to change the channel.

I used to pay $10 a month for all the commercial channels. Now they are part of a premium package and cost $50 a month to get. If the 20 minutes an hour of commercials are not paying for the network, then why am I watching 20 minute3s an hour of commercials? I gave up on cable or dish and now use only the internet for watching TV. When they start charging me for that I will give it up as well. Nothing is free, oh wait, when I was a kid TV was free.